Foreign control of US interstates encouraged by the feds

Fifty years ago, President Dwight D. Eisenhower signed into law the National Federal Aid Highway Act of 1956 and since 1990 it has been known as the Dwight D. Eisenhower System of Interstate and Defense Highways. Authorized the connectivity of 41,000 miles of high-quality highways in the United States. It would be funded by a combination of the Highway Trust Fund, federally imposed user fees on motor fuels, and state user fees.

Eisenhower was driven to persuade the nation’s people to build the interstate highway system as a matter of national security. Although he was not at war at the time, he believed it was imperative that the interstate be designed for the mass evacuation of cities in the event of a nuclear attack, in the Cold War era. The Act dictated that one mile in five must be straight, in order to be used as airstrips in times of war or other catastrophic emergencies. And to that end, the success of the national defense depended on the seaworthiness of large numbers of military personnel and their equipment during such a crisis. And even today, 75% of the interstate highway system represents the Strategic Highway Corridor Network (STAHNET) used by the US military.

And while in 1956 there was fear of a nuclear threat from the then-Soviet Union, today’s national security, often referred to as national security, remains similarly threatened in an era when the threat of terrorism looms. However, at a time when it seems imperative that strategic American infrastructure, such as the interstate highway system, remain under American control, it is just another public asset available for sale under the guise of public-private partnerships. Unlike national privatization, however, states across the country are negotiating contracts solely with foreign corporations and conglomerates, primarily in Europe, Australia, and Asia, to finance the maintenance, modernization, and expansion of US interstate highways.

As funding from federal gas taxes and state user fees have lagged behind the inflated costs associated with highway construction and maintenance, more and more state governors and legislators no longer see the operation of roads solely as a public responsibility. However, the reason the states initially took over the management of the highways in the early 19th century was because many highways, bridges, and canals had gone bankrupt in the hands of private owners.

According to Department of Transportation Secretary Norman Mineta, “We’re like a poker game. We invite people to the table and tell them, ‘Bring money when you come.'” And Mineta believes that “a big part of the answer is to involve the private sector more fully, not just as a contractor or vendor, not just as a financier, but as a partner in financing, managing and expanding our transportation infrastructure.” However, when those partners are exclusively foreign entities, an entirely new dimension is added to the management of the US interstate highway system. It is unprecedented.

The deal that kicked off a flurry of more than 18 foreign-funded proposed interstate highway projects across the country over the past year for amounts in excess of $25 billion was in Chicago, IL in December 2004. Chicago Mayor, Richard Daley, proposed an agreement to lease the Chicago Skyway for $1.83 billion from the Cintra-Macquarie Consortium, a Spanish-Australian conglomerate, doing business as State Mobility Partners in the US. The deal, finalized in January 2005, gave Cintra -Maquarie a 99-year lease for which he is responsible for the maintenance and structural quality of the 8-mile elevated structure.

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In exchange for your advance payment, Cintra-Macquarie will collect and hold all monies from Skyway tolls and may increase tolls as incorporated in the terms of the agreement. The company is modernizing toll collection with an electronic transponder system. Until the technology is fully operational, toll collectors have been hired recently but temporarily. But instead of earning a median hourly wage of $20.00 as their predecessors did, they are paid an hourly wage of $10.00 to $12.00. And as contracted, Skyway offers the buyer an asset without having to deal with improvements or debt.

Following the situation in Chicago, Indiana Governor and former first-term President Bush’s Office of Management and Budget director Mitch Daniels explored a similar fix for Indiana’s $2.8 billion shortfall in its transportation budget over the past few years. next ten years. Daniels got his highly controversial proposal passed in the state legislature and in court, where it was challenged by a citizens’ advocacy organization.

The state of Indiana accepted an offer worth $3.8 billion and an agreement was reached with Cintra-Macquarie, the same operator of the Chicago Skyway. The lease will provide for the operation and maintenance of the 157-mile Indiana Turnpike, a part of the Interstate Highway system, for a period of 75 years. The deal is expected to close on June 30, 2006. Indiana Toll Road will also have an updated electronic toll system installed, eventually ending the need for toll workers.

These are just a few of the many other projects approved or proposed across the country. In Virginia, the rights to manage, operate and maintain the Pocahontas Parkway, an 8.8-mile toll road outside Richmond, were bought for $611 million by the Transburban Group, also an Australian entity in its first foray into the US Highway Management A New Jersey legislator has proposed selling a 49% stake in the New Jersey Turnpike and Garden State Parkway to a private investor.

In August 2005, the same Macquarie Infrastructure Group took over the operations of the Dulles Greenway Toll Road, which runs between suburban Virginia and Washington, DC, for $533 million. And the anticipated widening and extension of the 316-mile Trans-Texas Corridor that parallels I-35 in Texas is scheduled to be built by Cintra, the Spanish company, and Zachry Construction, of San Antonio, TX, who plan to invest $7.200 million.

But extraordinary down payments, while attractive for states to reinvest in other transportation projects, also have their limitations and dangers. States will need to learn how to enforce and write explicit contracts. And the proceeds from the sale or lease of roads must be earmarked for specific projects. Non-compete clauses are often inserted into such contracts, such as the induction of lower speed limits on parallel free roads to drive traffic to the toll road. Others fear that carriers will only keep those parts of the route that remain profitable.

Other issues that arise more often after the fact is the growing concern that the public will have less and less influence over the use of their public assets. Such is the case in Colorado and California, where enforcement of child support issues has already become problematic. Immediate and perennially enforced toll increases, with higher tolls enforced at peak times, have not sat well with commuters.

However, questions will continue to arise in a process still in its infancy. However, states must be able to learn from the mistakes made in doing business in this new way. Will a private company maintain the roads as well as the US government? Will a foreign corporation care about the needs of the American people? And will it be unfortunate in the future to sell public assets to pay debts? You’d think Eisenhower would have thought so.

Copyright 2006 Diane M. Grassi